Brazilian Banking: A Two Horse Race

Brazilian banks have been on a tear this year, with both Itau-Unibanco (ITUB) and Banco de Bradesca (BBD) returning more than 100% year to date. Economists think Brazil is coming out of its recession, with The Economist stating that the country could see a return to 4%-5% in 2010, as Brazil is less dependent on the US as an export market and is forging ties in Asia, notably with China, on energy accords.

Over the last month however, ITUB and Bradesco, respectively the number 1 and 2 private banks, have been dragging, due to overall negative sentiment on Brazil in August, which has not been helped by President Lula's much discussed plan for the government to take greater control of oil reserves via the worlds fourth largest oil company Petrobras (PBR), which has seen some investors pulling back on Brazilian ADRs.